Financial Conduct Authority  

FCA and adviser in £200k authorisation spat

FCA and adviser in £200k authorisation spat

The Financial Conduct Authority has been backed by its watchdog in an authorisation spat with an adviser who sought a £200,000 compensation payment from the regulator.  

In a decision by the Complaints Commissioner earlier this year an independent financial adviser was unsuccessful in their attempt to reverse a decision by the FCA to reject a request for authorisation on two separate occasions. 

The adviser told the commissioner they had been authorised between 2001 and 2018 when holding controlled function positions at their own firm. 

But when they joined another firm in February 2018 the FCA first granted authorisation to the adviser, only to withdraw it soon after "on the grounds there was an error" and asked the employer to submit another full application on their behalf. 

But the firm did not submit another application and the adviser left the firm three months later in May 2018. In their complaint against the FCA the adviser requested an ex-gratia payment for "loss of earnings" since April 2018 of £200,000.

In May 2019 the adviser then joined another firm as a consultant and on the condition they registered with the FCA, with the new employer applying to the register on their behalf.  

The adviser told the commissioner that in July 2019 the firm was told by the FCA that the application should be abandoned and the complainant could function in a role which did not involve giving financial advice.

The adviser claimed the FCA's decision to withdraw authorisation in April 2018 and again refuse authorisation in July 2019 were "arbitrary and without justification" and had left them "reliant on state benefits and assistance from friends and family".

In addition to the request for £200,000 in compensation, the complainant asked the FCA to re-consider and grant them authorisation as a financial adviser with the firm first joined in May 2019. 

All elements of the adviser's complaint were rejected by both the FCA and its watchdog the Complaints Commissioner, partially on the grounds that the grievance fell outside of regulatory timescales. 

Under FCA rules complaints should be made within 12 months of the date on which the complainant first became aware of the circumstances giving rise to the complaint.

But even if the complaint had been submitted within the timescales, the FCA would have rejected the adviser's case on the grounds its complaints team could not "substitute its own judgment" for that of the wider regulator — including the authorisations division. 

This meant it was not able to overturn decisions made by the authorisations team to refuse authorisation or instruct them to re-open previously submitted applications which had been withdrawn. 

Commissioner Amerdeep Somal said: "I am sorry to hear about your current personal circumstances, but I agree with the FCA that the remedy you seek cannot be obtained through the complaints scheme in the manner you suggest, regardless of whether your complaint is in time or not." 

rachel.mortimer@ft.com